What is usage-based billing?
Usage-based billing charges a customer for what it consumed in a billing period, such as API calls, events, compute minutes or credits, rated against the price table in its contract. The amount is known only once the period's usage is counted, so the meter, the rate card and the invoice have to agree line by line.
How a usage charge is calculated
Count the period's events, then rate them on the contract's table. On a tiered table each band is priced at its own rate; on a volume table every unit takes the rate of the band the total reaches.
Usage charge = Units in each band × That band's rate
On a tiered table, the charge is summed across every band the period's usage reaches.
A worked example
In the illustrative example, Machair Worsted Inc's contract prices metered events on a 3-band tiered table, and June 2026 counts 2,040,000 of them.
| Operation | Line | Figure |
|---|---|---|
| First 500,000 events at $0.012 | $6,000.00 | |
| + | Next 1,000,000 events at $0.009 | $9,000.00 |
| + | Remaining 540,000 events at $0.006 | $3,240.00 |
| = | Usage for 2,040,000 events | $18,240.00 |
The same invoice bills 280 seats at $14,000.00 and draws $6,200.00 from the customer's prepaid credit, so $26,040.00 is due.
Common mistakes
Reading a tiered table as a volume table
The 2 give different invoices for the same events. Check which the contract states: tiered prices each band at its own rate, volume prices every unit at one rate.Billing duplicate events
A retried request can arrive twice. In the illustrative June, a check before sending removed 12,400 duplicate events from Gadwall Fustian Inc's invoice.Counting late events in the wrong month
Usage that arrives after the period closes belongs to the month it happened. Fanlight Betony Inc's 1,860 late May events sit on its June invoice as a May adjustment of $18.60.
How Verlix handles it
The Invoice agent rates each period's events on the contract's own table, removes duplicates and holds the invoice until every line agrees with the events behind it. Tiered rate cards, commitments with overage and prepaid credit all bill from the same count.
Usage-based billingRelated terms
Proration
Charging for part of a period when a plan or seat count changes mid-cycle.ARR
The yearly value of committed recurring revenue, measured on one day.Deferred revenue
Billed or collected but not yet earned, a liability until the work is done.